Mortgage Defaults Up, Repossessed Houses to Rise

The number of repossessed houses across the U.S. is set to increase further as the number of delinquent mortgages guaranteed by Fannie Mae and Freddie Mac jumped up in April, based on a report from the U.S. Federal Housing Finance Agency.

Not only did mortgage delinquencies rise, but the number of lender modifications for loans guaranteed by Federal National Mortgage Association Foreclosures and Federal Home Loan Mortgage Corporation Foreclosures also declined.

The number of borrowers who have defaulted on their home loans guaranteed by Fannie Mae and Freddie Mac in April jumped by 6.5 percent.

Meanwhile, the number of loan modifications worked out in April fell by 12 percent to 13,800. But government housing officials said this figure is not an accurate representation of the progress of efforts to contain repossessed houses because of a revision in loan modification reporting rules.

The Home Affordable Modification Program features a trial loan modification period of three months, and these loan modifications are not yet counted until the three-month period is completed.

In April, the number of borrowers whose mortgage loans are guaranteed by Fannie Mae and Freddie Mac and who were already in default by two months or more jumped up to 1.1 million, an increase of 1.17 percent from the number in March.

The total number of mortgage defaults in April accounted for nearly 4 percent of all mortgage loans guaranteed by Fannie Mae and Freddie Mac. Out of these delinquent home loans, over 10 percent of nonprime home loans were in default by 60 days or more.

FHFA also reported that sales of repossessed houses and home sales made by third parties in April jumped up to 14,200, a substantial increase from the 9,300 units sold in March. According to FHFA officials, the increase was largely caused by sales of owner-occupied homes and vacant houses which were long identified as unqualified under all the programs of the federal government to contain repossessed houses.

Mortgage default data for April from the Mortgage Bankers Association mirrored the home loan default data of FHFA. According to the MBA, the nationwide home loan delinquency rate hit an adjusted rate of 9.12 percent, a jump from the previous level of 7.88 percent.

According to many economists, the stunning rise of the joblessness rate to 8.9 percent in April and the increased number of prime borrowers whose homes have become repossessed houses are definite signs that unemployment has cut down the ability of borrowers to pay their mortgage loans.

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